Sam Upchurch, a single taxpayer, acquired stock in Hummer Corporation that qualified as a small business corporation under 1244, at a cost of $100,000, three years ago. He sells the stock for $10,000 in the current tax year. Question Content Area a. What is the tax treatment of Sams loss? Sam would have a capital loss of $fill in the blank c5861ffb505d071_1 and an ordinary of loss of $fill in the blank c5861ffb505d071_2 for tax purposes. Question Content Area b. Assume instead that Sam sold the stock to his sister, Kara Upchurch, a few months after it was acquired for $100,000 (its fair market value). If Kara sells the Hummer stock for $60,000 in the current year, how should she treat the loss for tax purposes? She will treat the loss as loss of $fill in the blank 034ed405d063025_2 for tax purposes. Question Content Area c. Enter the results of this transaction for Kara on Form 1040, Schedule D (p. 1) for the tax year 2021. Assume that relevant facts from the transaction initially had been shown on Form 8949 with Box F checked. If required, use the minus to indicate a loss. If an amount is zero, enter "0". SCHEDULE D (Form 1040) Department of the Treasury Internal Revenue Service (99) Capital Gains and Losses Attach to Form 1040, 1040-SR, or 1040-NR. Go to www.irs.gov/ScheduleD for instructions and the latest information. Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10. OMB No. 1545-0074 2021 Attachment Sequence No. 12 Name(s) shown on return Karen Upchurch Your social security number 123-45-6789 Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss. Part I Short-Term Capital Gains and LossesGenerally Assets Held One Year or Less (see instructions) See instructions for how to figure the amounts to enter on the lines below. (d) Proceeds (sales price) (e) Cost (or other basis) (g) Adjustments to gain or loss from Form(s) 8949, Part I, line 2, column (g) (h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g) This form may be easier to complete if you round off cents to whole dollars. 1a Totals for all short-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b . . . . . . . . . . . . . . . . . . . . . . 1b Totals for all transactions reported on Form(s) 8949 with Box A checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Totals for all transactions reported on Form(s) 8949 with Box B checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Totals for all transactions reported on Form(s) 8949 with Box C checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 . . . . . . . . . . 4 5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 . . . . 5 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 () 7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part II below. Otherwise, go to Part III on the back . . . . . . . . . . . . . . . . . . . . . 7 Part II Long-Term Capital Gains and LossesGenerally Assets Held More Than One Year (see instructions) See instructions for how to figure the amounts to enter on the lines below. (d) Proceeds (sales price) (e) Cost (or other basis) (g) Adjustments to gain or loss from Form(s) 8949, Part II, line 2, column (g) (h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g) This form may be easier to complete if you round off cents to whole dollars. 8a Totals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b . . . . . . . . . . . . . . . . . . . . . . . 8b Totals for all transactions reported on Form(s) 8949 with Box D checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Totals for all transactions reported on Form(s) 8949 with Box E checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Totals for all transactions reported on Form(s) 8949 with Box F checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . fill in the blank 09435bfff04dfc1_1 fill in the blank 09435bfff04dfc1_2 fill in the blank 09435bfff04dfc1_3 11 Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and long-term gain or (loss) from Forms 4684, 6781, and 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 . . . . 12 13 Capital gain distributions. See the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 () 15 Net long-term capital gain or (loss). Combine lines 8a through 14 in column (h). Then, go to Part III on the back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 fill in the blank 09435bfff04dfc1_4 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11338H Schedule D (Form 1040) 2021 Schedule D (Form 1040) 2021 Page 2 Part III Summary 16 Combine lines 7 and 15 and enter the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 fill in the blank 09435bfff04dfc1_5 If line 16 is a gain, enter the amount from line 16 on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 17 below. If line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete line 22. If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 22. 17 Are lines 15 and 16 both gains? Yes. Go to line 18. No. Skip lines 18 through 21, and go to line 22. 18 If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 19 If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions), enter the amount, if any, from line 18 of that worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 Are lines 18 and 19 both zero or blank and are you not filing Form 4952? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 16. Don't complete lines 21 and 22 below. No. Complete the Schedule D Tax Worksheet in the instructions. Don't complete lines 21 and 22 below. 21 If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7, the smaller of: The loss on line 16; or ($3,000), or if married filing separately, ($1,500) } . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 fill in the blank 09435bfff04dfc1_6 Note: When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualified dividends on Form 1040, 1040-SR, or 1040-NR, line 3a? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 16. No. Complete the rest of Form 1040, 1040-SR, or 1040-NR.